A perennial challenge among retailers around the world is effective inventory management. Although retailers bear the consequences of this challenge in the form of lost sales or eroded customer loyalty, the entire supply chain is implicated. A product may go out of stock at the retailer's shelf due to failure to replenish products at the shelf, improper volume control at the store, poor demand forecasting, problems with distributional logistics, and complications at the manufacturing center.
One manifestation of this challenge to effectively control inventory of retail products is the failure to detect and correct when a retail product is “out of stock” on a shelf. In the United States alone retailers lose an estimated 4% of annual sales due to this problem. Lost sales are only one aspect of this problem; customers also become frustrated when an product they need is not available, eroding customer satisfaction and loyalty to retailers.
In most retail stores, out of stocks are detected only when a store employee visually identifies that an product is no longer stocked on the shelf. The employee must then record the product needed, find the product in the storage or warehouse area of the store, and re-stock the product. This process is time-consuming, costly, and inefficient. The process is particularly inefficient because a substantial amount of time may pass between the last product being removed from the shelf and identification of the out of stock product by a store employee.
A second manifestation of this challenge is the overstocking of shelves in a retail store. Many retailers fail to optimize the allocation of shelf space for their products, resulting in some products being stocked on a shelf at a volume such that the product would not sell out for several days or even weeks. This practice creates an inventory glut of some products, which increases the inventory cost or holding cost of a retailer.
A third manifestation of the challenge of effective inventory management is out of place inventory. It is not uncommon for customers to change their purchasing decisions during shopping, sometimes returning products to shelves not designated for the returned product. This may result in lost inventory, spoilage, and/or and unnecessary restocking of the product.
There is thus a well-established desire in the field of retail inventory control to implement a new system or apparatus for improving the inventory control and management of retail products. More specifically, there is a demand among retailers for a system or apparatus capable of optimizing at-the-shelf inventory of retail products, predicting when an product may go out of stock, identifying out of place inventory, and notifying the retailer in sufficient time to avoid the problems associated with out of stock inventory identified above.